Reta Jo Lewis on why nuclear has a ‘definite place’ in the transition to clean and secure energy

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Speaker

Reta Jo Lewis
President and Chair of the Board of Directors, Export-Import Bank of the United States

Moderator

Frederick Kempe
President and CEO, Atlantic Council

Event transcript

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FREDERICK KEMPE: Thank you, everyone, for joining this special discussion with the president and chair of the board of directors of the Export-Import Bank of the United States, the Honorable Reta Jo Lewis.

So Chair Lewis and I have known each other for some time. I just always enjoy conversations with her.

I’m going to open with some questions. We’ve got a tight half-hour. And then I’m going to turn to all of you, so already start thinking about what you’d like to ask Chair Lewis.

So the honor is always to host you. You’ve been serving as president and chair of EXIM since 2022, and a senior executive with twenty-five years—more than twenty-five years of leadership experience in international affairs, legal, public policy, business and regulatory affairs, and subnational diplomacy, including as special representative for global intergovernmental affairs under Secretary Hillary Clinton and vice president and counselor to the president at the US Chamber of Commerce.

So some people in this room have worked with EXIM Bank. Some people really don’t know what it does at all. And I just wondered if you could start by giving us a little bit of feeling on how you pursue your mission and how you see your place in the financial ecosystem, and particularly at this challenging but very promising time for the energy sector.

RETA JO LEWIS: No, absolutely, Fred. Thank you so much for giving us a few minutes to be here today with the EXIM team and also with our ambassador’s team. Our chargé has a great group of commercial officers that we work with here on the ground.

Just a little bit about EXIM Bank. It’s actually good to be in a room where people do understand about EXIMs or about export credit agencies. EXIM Bank, an organization founded back in 1934 by Franklin Delano Roosevelt, I think continues to live up to the mission that the president announced ninety years ago, and that is for us to be an agency that facilitates exports and supports US jobs. And I always like to say when you’re talking about jobs in these transactions, you can’t just be talking about jobs in the US; you got to be talking about jobs in the host countries and the home countries of which you’re also doing business in.

But you know, I think where we see our place in this ecosystem when we’re talking about clean and secure energy, as a significant player but as only one part of the puzzle. We are an institution that is chartered by the United States Congress, and we have been an agency that when we were reauthorized in 2019 Congress asked us to take on four additional mandates.

One, to make more financing available in small business.

Make more financing available in the transformational export areas. Everything—and there were ten export—transformational exports that were named, everything from semiconductors, AI, quantum computing, biotech, biomedical, and then you put in there renewables, wastewater treatment, and the like.

You also—Congress asked us to make more financing available in sub-Saharan Africa.

And also to make more financing available in the renewable energy, energy efficiency, energy storage space.

And so the debt finances of the US government and also as a jobs agency, we see our prime goal as to help US exporters to not only compete, but also to win global sales; but also working with our foreign buyers who also want to purchase goods and services, as long as they’re exported back to the—to the US That is our central mission. That is our central place in this ecosystem.

And also, knowing full well that we are an agency that does not work alone. We work with our other government partners in what President Biden and Vice President Harris likes to say is our whole-of-government effort, because what one government agency can do versus what another one can do is oftentimes different, but if all of us are working together—everything from our Cabinet agencies to agencies like EXIM Bank, DFC, MCC, and others—we each have a role to play in this—in this ecosystem.

FREDERICK KEMPE: Thank you so much, Chair Lewis.

We were together in January in Davos at the World Economic Forum and you talked about EXIM Bank’s commitment to nuclear and renewable energy projects. The people in this audience, many of them are in this business. Some of them are getting into the business of small modular reactors. They’re in the business of various different kinds of renewables. How are you looking at that at EXIM Bank? Is this a growing area? Is this—and where are you putting your priorities?

RETA JO LEWIS: It’s definitely a priority, and I’ll tell you why. One of the things that is so important about the nuclear space—and it’s really good to be here at a conference that is focused regionally, because in this region alone EXIM Bank has been very, very active. But in the field of nuclear, we also have a thirty-plus-year history of being—of authorizing transactions in this space, everything from working with [small modular reactors (SMRs)] to large nuclear reactors. And now, as we work with the nuclear councils, we’re even, with our US partners, talking about the microreactors.

EXIM Bank has a history of analyzing these transactions, everything from whether it’s from a legal or financial, environmental perspective, and just looking at the different packages that are coming before us. Our pipeline is strong.

I think it has gotten even stronger when last year, when we went—when we all went to COP, no one knew that it was going to turn out to be the nuclear COP. And I think it really has propelled global leadership of understanding the fact that nuclear has a definite place in the solutions that is going to have to happen in the clean and secure energy space.

Ever since I believe Secretary Kerry, when he was the special envoy, went to Romania to the Three Seas Conference—and that’s where we were at—and he talked about the fact of his evolution of knowing that nuclear was going to have a place and a space in the transition for—to a greener economy, and we at the time—the year before—had just awarded to the president and the Ministry of Energy in Romania a letter of interest about the work that we wanted to do with them around SMRs. Also, it’s good to be able to circle back and come full circle that in the discussions that we have had with Romania just in the last several weeks we have awarded—not only have we done those letters of interest, but we have been working very closely with the Romanian leadership as well as with the Energy Department and all of those companies that are going to be doing business there in the—in the nuclear space. And we just awarded a—I think it was, like, $99 million for an engineering multiplier program direct loan to support them in all of the pre-design work that they have to do in—on their nuclear reactor project.

The thing also that has been very critical is that I’m actually coming from London, whereby we were there just a few short days ago meeting with the new government and also the newly sworn-in parliament members who were the chairman of the Nuclear Committee and seven to—I think it was about six of his other parliamentarians. And we were really there in support of the American companies and any company, as I said, who’s exporting US goods and services; three of the American companies who had been successful in the negotiation of the awards of the finalists. And so everyone from the GE, Hitachi, Holtec, Westinghouse are some of the finalists—along with Rolls Royce are some of the finalists in that award, and what we wanted to as EXIM is not only to continue to talk with the American companies there, but also to talk to those who are going to be in their supply chain. That award, from what we are understanding, is going to be down to two. But these are such big and complicated projects that there is probably room for a whole host of people who are going to be in support of what’s going to be taking place in England in the coming months and years.

But we were there to send a signal—continue to send a signal to the market of how we want to use the products and tools that we have, everything from whether it’s direct loans or working capital guarantees or export credit insurance products, to show them that we are in support of any US company that is going to be working in or who will be successful in that market.

FREDERICK KEMPE: Thank you for that. And that is a pretty exciting announcement that just came out regarding Romania, and I think we even have some people in the audience that are involved in that—in that project.

So we are here talking about the region, but we are in Turkey. And I wonder if you could talk about Turkey and the most promising sectors for EXIM Bank here. It was—it was really interesting to me listening to the energy minister yesterday. Many of you in the audience may have known this, but know that well more than 50 percent of the power is coming from renewables—I mean, we aren’t there yet in the United States—which is pretty impressive, and also his quite ambitious plans for nuclear, and also the critical minerals group that has been put together. So there was a lot going on there. Where do you think you could work most effectively on energy transition issues in Turkey?

RETA JO LEWIS: Well, first of all, we have such a strong relationship in terms of US-Turkey. We were really glad to also be a part of that conversation, Assistant Secretary Pyatt and myself meeting with the minister right after his speech where he also talked about the renewable fund that he announced.

We’re really excited about the work that EXIM Bank has done here in Turkey. We have a strong relationship with US—with the EXIM’s—Turk Exim, just as we have a strong working relationship with other EXIMs around the world, and definitely around the region. In the last several years, we’ve probably signed over twenty memorandums of understanding and co-financing agreements, which allows us to lay out pillars that we want to prioritize, and we want to focus on. And, of course, the space of renewables has always been one about energy, and efficiency, and storage.

Our exposure here in Turkey is about two billion dollars, which we believe is still not nearly enough for the size of an economy that it is. But we’ve had a history of working very successfully in Turkey. We’ve had a long history of working here in the aircraft industry. And, as we said to the minister yesterday, being on the ground and being here, but also working in concert with our consulate and our embassy, is where we can be able to meet the individual executives, and leaders, and players, not just in Turkey but also in the region, to seek out those bankable projects, to hear from individuals early about the types of projects that they’re going to be doing in this entire clean energy ecosystem, and to let them know how EXIM is willing to be a strong collaborator and partner in the financing of these types of projects.

You know, for Turkey, you know, one of the things I know that, as such a strong regional leader, this commercial relationship that US and Turkey have is growing. And we see it, as we said to the minister yesterday, we think that it’s going to grow bilaterally, and it’s also going to grow, we believe, in a third-party cooperation way as well.

FREDERICK KEMPE: So I do want to get to people in the audience. So let me ask one question right now, although I have a long list I’d like to ask. But let me ask one more question on my part, then I’m going to look for hands here. And I think we have someone with a—or we have microphones in front of you. We’ll figure that out. But it always interests me when there’s someone in your kind of position, you’ve been in a lot of different interesting jobs, what either about this job gets you excited right now, or what specific project’s success stone, milestones have really got you excited in the recent past?

RETA JO LEWIS: You know, I would say, Fred, this has been a great opportunity that I have, serving in the Biden-Harris administration for President Biden as the head of EXIM. We are really seeing such a renewed focus on the work that we do as an export credit agency, and the impact that we can have with the financing that we can provide for American companies who are out there competing. Because part of our work is also about leveling the playing field. If we can use any tools that we have to help an American company or foreign buyer, as I said who’s exporting goods and services, secure a winning a bid, we want to be right there on the front lines with them.

But I think when I can—I always say things are—you got to also look at the numbers. When we first came in, two-plus years ago, on the—specifically in the renewable space, because we have that mandate. We had only done about eleven million dollars. The next year we did 175 million dollars. And the third year we did over 900 million dollars. That requires a significant amount of focus.

FREDERICK KEMPE: So from eleven million to 900 million dollars?

RETA JO LEWIS: Eleven million dollars. Now, granted, it was some very large deals that we did. But also, we have to look at the mandate that Congress has asked us. We have to look at the mandate coming from the initiatives that are coming out of the Biden-Harris administration, when the president worked with his G7 colleagues to talk about Partnership for Global Infrastructure and Investment Initiative. And so that 900 million dollars—that increase in terms of how we did that, and then even this year with the numbers still not totally in we’re over about a billion six dollars—

FREDERICK KEMPE: On renewables?

RETA JO LEWIS: On renewables, in the renewable—everything from solar, to mini-grids, to rural electrification. Now, that large deals—and some of those deals definitely have been in Angola. And I think it’s very, you know, perfect for an audience like this, because as we have met with so many people in the business community who are—who have done a lot of work here in Turkey, in Africa. And so for them to understand, for any of you to understand our commitment in sub-Saharan Africa, and throughout Africa. Bar none, I think those numbers tell the story. So when you see and meet with President Lourenço, and his Cabinet, and his business community, and his other leaders in Angola, and understand that you can have that level of direct impact on a community and what’s to come.

The other thing is, is that when you do financing to that magnitude, it sends a very powerful signal to the market that EXIM sees that market, they see the country of Angola as a stable, secure market for us to be in business with. I think it also sends the signal that others, and we’re beginning to see that, are actually also going into—going into that market. So the proof is going to continue to be in the pudding. We can’t wait as that project—as those projects begin to take shape and come off the ground.

FREDERICK KEMPE: Well, obviously part of what you’re doing is promoting US exports. Is there room for non-US companies in your African –

RETA JO LEWIS: Absolutely. Absolutely.

FREDERICK KEMPE: So if—you know how active Turkish companies are in Africa.

RETA JO LEWIS: Yes.

FREDERICK KEMPE: How does that work?

RETA JO LEWIS: Well, that’s why I was saying also, we’re—Turkish companies who—and the relationship that we have, from a US perspective, with Turkey, and the relationship that Turkey might have with—you know, from a third-party cooperation. EXIM Bank is about funding of goods and services to be exported. So any foreign buyer who is purchasing goods and services in the United States from any company, if they’re being exported abroad we can finance that. So that applies to anybody in this room, if they’re in the export game.

Also, we have introduced some new tools, one in particularly, because it goes straight to the reshoring work that the administration has been doing in our supply chain. We have a new product called Make More in America, and the Make More in America initiative is the first time that EXIM Bank, on domestic soil, on US soil, can support domestic manufacturers as long as—one of the key areas, of course, is—you’ve got to be exporting over the life of the whatever product that we would be awarding in an authorization. Those domestic manufacturers who are trying to either grow or expand in the US and want to look for financing, EXIM for the first time has the ability to do that.

And so with such a strong trading relationship between our two countries, with such a strong relationship of Turkish businesses who are trying to invest in the United States, it’s also another tool they too can use to gain support from US EXIM as long as—we would like to say direct loans—do direct loans and over the life of that project is when the exporting has to come. And then of course you have to have a jobs component.

FREDERICK KEMPE: Yes, really helpful. Questions—looking to the audience. Do I see anyone? Because I don’t, I’m going to—oh, I think I see one here—I see two here, so we’ll go here in the front and the toward the back—the distinguished Ariel Cohen.

Q: Ariel Cohen, the Atlantic Council. Thank you for your two excellent interventions last night and today.

So just to clarify, in terms of natural gas projects, do you have availability of finance for natural gas projects, or is this against policy?

RETA JO LEWIS: One of the good things about EXIM Bank is that, as a federal agency, we only have one prohibition that we do not finance anything in the military space, anything lethal. There is only one exception to military use, and that is dual use. And so I always like to describe that as police, fire, and border protection. We can fund those types of projects.

The thing about us is that EXIM Bank, we take all of our statutes, and laws, and rules that Congress puts before us, and we have a prohibition against discriminating against any company, any size, any sector.

Q: And just the—

FREDERICK KEMPE: So the answer and—

Q: The answer is yes.

FREDERICK KEMPE: The answer is yes, you can.

Q: That’s good to know.

FREDERICK KEMPE: Yes.

Q: And the second is what is the default rate historically on your financing?

RETA JO LEWIS: We are really—EXIM Bank, unlike others, you know, there is a 2 percent default rate that we have. We are very happy that, in this administration, as we go in for reauthorization on our budget, we have been approved in our discussions with the US Congress for our default rate to be increased from 2 to 4 percent.

For those who do not know, you know, if we go over that 2 percent rate, we would be what they call pencils down. We are very fortunate right now that it is at about—less than 1 percent, so we are doing—we are doing pretty well because of a lot of the work that’s been going on by some great staff at EXIM.

But we are also—been working with Congress—and when I testified most recently about asking Congress for an exemption from the default rate of our transformational export program, which is our China transformational export program, as well as an exemption from—on critical minerals. And I mean—not critical—on nuclear and—as you know, those are some very large projects, they’re very complicated, and those are some very large and sometimes nascent technologies in that transformational export area. And so we’ve been very active in our discussions with the US Congress to see what’s going to happen for us as we go in for our budget review for next year.

FREDERICK KEMPE: Thank you. And I think I saw a question in the back, please. If you could identify yourself in the question, please.

Q: Yes, it’s Eldar from Nobel Energy Azerbaijan.

I want to ask the question, from your bank environment in general, it was not easy to attract the financing to do renewables. In general, it would be more driven by the government standing behind, and initiatives, and everything. And we had some moments of big, giant oil companies or energy companies who are basically in the front line of the transition to renewables because they are driving this energy economy, taking the targets to renewables.

But after some shocking element of not the same generating value from the renewables, some oil giant companies start leaning back towards the traditional energy game. So if we believe the Reuters dated 7th October, BP announced that they are abandon a target to cut oil and gas out by 2030, which means significant change in strategy. So they don’t—they really abandon this target to reduce oil and gas, and they go back in the tradition energy sources.

Having that trends in big, giant oil companies shifting—not shifting, but maybe still stopping, like, into renewables, do you think this jeopardize the financing in general to those renewables projects because there are more attraction to the oil and gas and tradition energy again? Thank you.

FREDERICK KEMPE: I think you’re talking—I think the question was really the difficulty of financing renewables versus nonrenewable energy sources. Is that right? It was a little bit hard to pick some of it up.

RETA JO LEWIS: So I—if I understand him a little bit, it is about the fact that, for us as an agency, we are demanding of an agency. Whoever walks in the door, we’re going to be looking at those projects. And we’re going to—and we do a very rigorous amount of due diligence work on each and every project that we do. EXIM is very fortunate that we have a lending cap of about 135 billion dollars, and—we were talking about this last night—about 35 billion dollars has already been deployed, and we have about $100 billion left.

But, you know, if you do a lot of these—some of these new technologies, you do a lot of these—if you can do nuclear projects, this can eat into that very well. And that’s why co-financing with other [export credit agencies] is very important.

For us at EXIM, being a demand-driven agency, we have to look at everything. We have to look at everything that walks in the door. But that doesn’t mean that we stop there. We are out aggressively in organizations, meetings, and conferences like this, trying to talk about EXIM, talking about what products and services we have, but more importantly, we want to let you also know about the flexibilities that we might also have in our financing that will hopefully make us a lot more competitive, whether it’s competitive more around the offerings that we can offer you around exposure fees, around tenors, and around terms.

Now we also have some additional flexibilities that gives us an ability to do longer-term loans. But the other thing that we also want folks in this audience to know is that, I mean, we are open in all sectors. We are open in all sectors. We do not have a country cap. We do not have an industry or business cap. We are doing everything from $250 worth of export credit insurance, to hundreds of millions, to billions of dollars. And we’re looking at all sectors; everything—especially here in Turkey, we’re looking at the telecom sector. We’re looking at health care, we’re looking at everything in the digital space, data centers, and the like. And so we’re open for business, and we want to be in partnership with the US and Turkey, to continue that strong commercial relationship, but we want to be in partnership with all of you, especially in the region because this is such—all of you, as our—in the working relationship, this is an area—especially for this conference—that is only growing, and is going to be expanding, and we really are seeking opportunities to work with you. And we really appreciate being able to be here to do that.

FREDERICK KEMPE: I think that’s a—I think that’s a great place to close. For you in the audience, $100 billion left in the lending cap, no country cap, no business cap. We’re going to look at things that come in. So I think that’s a pretty exciting—it’s a pretty exciting message, and also the news of what you are doing in renewables, the news of what you are doing in nuclear, we see the trajectory in that direction.

So Chair Lewis, thank you so much for being with us from Washington, and thank you so much for giving us a really great view of how we could get all of the people in this audience to do more business with you.

RETA JO LEWIS: Absolutely, and we’ve got the EXIM team and the embassy team here to meet with all of you. Thank you very much.

FREDERICK KEMPE: Thank you.

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Further reading

Image: Reta Jo Lewis of the US Export-Import Bank speaks with Atlantic Council President and CEO Frederick Kempe at the Regional Conference on Clean and Secure Energy on October 10, 2024.